Patent Suit Venue Rules Reinforced Post-TC Heartland

Federal Circuit rebukes Eastern District of Texas’ attempt to keep case

Had the Federal Circuit Court of Appeals gone a different direction in a recent order, some companies might have been uneasy about having employees telecommute from Eastern Texas.

The Federal Circuit clarified patent venue rules in a Sept. 21 order issued In Re Cray, Inc. The appellate court found that a telecommuting employee’s home doesn’t count as a regular and established place of business, and therefore it doesn’t make for an appropriate venue for a patent infringement suit filing. The Federal Circuit rejected the analysis by the U.S. District Court for the Eastern District of Texas, a traditional patent suit hotbed, and set forth its own three-part test for a regular and established place of business under 28 U.S.C. § 1400(b).

The order is the first major follow-up on patent suit venue rules following May’s landmark Supreme Court decision in TC Heartland, which tightened up the meaning of where defendants “reside” for the purpose where plaintiffs can sue for infringement. Cray therefore should continue to limit plaintiffs’ access to the Eastern District of Texas, which before TC Heartland saw roughly 40 percent of all U.S. patent suit filings in recent years.

Defense contractor Raytheon sued Cray, a Seattle-based company that sells supercomputers, for patent infringement, filing in the notoriously patent plaintiff-friendly Eastern District of Texas. Cray, which rented or owned no office in the district, had two sales personnel working remotely from their homes in that jurisdiction. Raytheon pointed to those employees as Cray doing business in the jurisdiction and therefore making Eastern Texas an appropriate forum according to patent venue rules.

To read this story and other complete articles featured in the October 2, 2017 print edition of Law Week Colorado, copies are available for purchase online.